Apple's annual results, published yesterday, are once again breaking the bank. Sales rose from $391bn to $416bn year-on-year, while net income increased from $98bn to $112bn, indeed supported by a surprisingly lenient tax bill of only $21bn compared to pre-tax earnings of $133bn, representing a tax rate of 16% that many would envy.
Two notable facts: first, Europe and North America are driving growth, as sales are declining significantly in China, the group's third largest market, accounting for about one-sixth of its consolidated revenue; Second, the services business—App Store, streaming, iCloud, payment services, and warranties—continues to expand rapidly, with sales reaching $109bn over the last twelve months.
Sales in the services segment have therefore doubled in five years, at a faster pace than the products segment; they now represent a quarter of consolidated revenue. This remarkably well-executed diversification effort is necessary, as half of Apple's consolidated revenue remains tied to iPhone sales. These will reach $210bn in 2025, twice as much as the other three product categories—Mac, iPad, and accessories—combined.
This year, Apple is returning $105bn to its shareholders, mainly via share buybacks worth $91bn—from which, however, we could subtract $13bn in stock option-related securities issues—thus allowing 2.5% of outstanding shares to be withdrawn. This illustrates the sheer size of the company, which now has a market capitalization of over $4 trillion.
Interestingly, these returns to shareholders in 2025 are lower than they were last year: they reached $110bn in 2024. Apple is thus allowing a few billion more to pile up in its already bloated cash reserves: $55bn if we include short-term cash equivalents, $133bn if we include those carried on the balance sheet for the longer term. Is the group led by Tim Cook preparing a major acquisition?
Already starting from a high base, Apple has managed to double its profits in ten years. As it has also reduced its number of outstanding shares by a third in the meantime—by redirecting the vast majority of its profits to share buybacks—EPS has grown at an even more impressive rate, from $2 in 2016 to $7.5 in 2025.
Remarkably, Apple traded throughout 2016 at an average of only 12x its earnings. Ten years later, its market capitalization, which has risen from an average of $600bn to over $4 trillion, commands a valuation of more than 40x its earnings.
